National Housing Corporation

Earlier this year Desmond Yaninen emailed around a passionate email about the housing shortages and high prices in Port Moresby. You can read about it here and here. The last email that went around stated that a meeting was to be held with NCD Governor Powes Parkop. However I have not heard about what happened with that.

In any case someone, somewhere must have heard something, because 2 months ago on the 16th June, 2009, Patrick Pruaitch wrote to ICCC officially directing the Commission to conduct a review on Housing. He wrote, “…I note that access to decent and affordable housing is an issue that is increasingly affecting Papua New Guineans. I expect that this review will identify some of the major failures within the industry that causes this and what government can do to address these issues…”

The principle objectives and deliverables of the review are as follows:

“Report on the current state and operation of the Housing Industry in PNG with particular focus on:

the size and other characteristics of the housing industry,

the competitive behaviour of participants in the industry,

impediments to competition in the industry, both regulatory and non-regulatory,

the relationship and interaction between real estate companies, the building companies, finance companies, National Housing Corporation, Department of Lands & Physical Planning, Insurance Companies and the owners of the properties,

any particular issues impacting on competition at the housing industries arising from the spatial characteristics of the country.

the current statutory arrangements in releasing land for property development to assess if some improvements are necessary,

the nature of the regulatory and supply/demand factors acting upon the behaviour of the market,

the role and behaviour of the main players in the market such as land development companies, the National Housing Commission, the real estate agents, the larger private sector business who provide accommodation to its employees, government departments providing housing for its employees and private individuals who acquire land or house,

factors determining the availability of housing for owners or for lease,

evidence of market failure (inability of the market to determine the right balance between demand and supply of dwellings,

finding out if the current high prices of property rental and purchase and the pent up demand is related to demand, supply or a combination of both and what policy measures would be required to address this, and

the range of government policy and regulatory requirements impacting on the industry, including the consistency in these regulatory requirements at the national and Provincial government level across the country.

Identify Issues and areas where Government action may be appropriate to address the problems and issues which are contributing to the failure of the market to get the demand and supply balance right to improve the overall competitiveness, efficiency and effectiveness of the housing industry in PNG.

Make recommendations on what action by Government may be appropriate to rectify any problems in the current structure, regulation and operation of the Housing Industry with a view to improving competition and the imbalance in the supply and demand for accommodation”

(The cover letter and the Terms of Reference for this Review can be viewed here).

I’m sure such a review will take some time, but things have to be sorted out soon before the PNG LNG project forces prices up even higher, because we all know too well the side effects of not enabling the lower end of the market to catch up.

Although its a complex issue we have to walk through everything pace by pace to see where we’re at because housing prices going up are one side of the argument, but what about how much people are being paid? Multi Nationals and Large companies are making a killing now in what is being seen as an economic boom. Banks can raise service fee’s by just K1 and this will immediately bring in an extra million to their profits without flinching an extra muscle.

So a Housing Review is a good start but providing a holistic lifestyle improvement across the board for all Papua New Guineans still goes back to the governments inability to manage what they have. How many NHC houses in NCD alone have rotten till they’re falling apart?

The first thing the government can do to show their seriousness towards the housing issue is to start improving what they already have. They have a multi-million kina property portfolio on their hands which could make them millions in returns if only they could organise themslevs to just start with one, by painting it, repairing it, maintaining it and then managing the rental payments. Why do they end up selling them off to people for short term gains?